We’re seeing good opportunities in some of the defensives that have been left behind: Causeway Capital
Ellen Lee, Causeway Capital Fundamental Portfolio Manager joins the Yahoo Finance Live panel to discuss the latest market action.
Video Transcript
ZACK GUZMAN: Ellen Lee, Causeway Capital Fundamental Portfolio Manager, joins us here. And Ellen, I mean, when we're stepped back, yesterday's sell-off was pretty focused on the tech names we've been watching. And, you know, as I pointed out, energy has rallied quite a bit to start the year. When you look at maybe this risk-reward for portfolio managers out there now, how are you seeing it play out?
ELLEN LEE: Well, looking at the past 12 months, there has been a strong rally in the cyclicals. If you look at S&P, the S&P cyclicals have massively outperformed the broad index. And people are anticipating you can see in the financials of an economic recovery. For our portfolio, we have really brought our volatility and perspective betas down. And we're also seeing really good opportunities in some of the defensives that have been left behind. So sectors like pharmaceuticals in the last two decades have almost never been more attractively valued versus the market.
And going forward, we still see some pockets of recovery and cyclicals, whether it be in the semiconductor side or travel-related names because there is some reopening trade that still needs to play out. But in terms of the broader cyclical recovery related to high cyclicals or high quality cyclicals, a lot of that has been done.
AKIKO FUJITA: So Ellen, let's talk about those defensive names that you like, some that you've pointed out-- Unilever, Novartis, Sanofi. What's the common thread there that you see that provides real opportunity?
ELLEN LEE: So, overall, as I mentioned, you know, defensives have been left behind, especially pharmas. And in the case of Sanofi, a French pharmaceutical company that has a good drug pipeline, that actually has an underappreciated vaccine franchise. And thirdly, they're going through a cost efficiency program, which they've never embarked on. And the margin gap versus the global peers will narrow. And even the most recent quarter, we've seen some strides. So it's more driven bottom up on where the companies are specifically and their management strategy going forward.
ZACK GUZMAN: I mean, there's a lot to watch here. And the opportunity is there. And that's one that we have maybe not necessarily discussed here as much either. But Ellen Lee, Causeway Capital Fundamental Portfolio Manager, appreciate you coming on here to chat with us today.
